An effort to oust Poland’s central bank Governor Adam Glapinski took a major step as a parliamentary committee recommended lawmakers vote to put him on trial. The zloty was one of the worst-performing emerging-market currencies on Friday.
Following a two-year probe, the committee endorsed all eight accusations leveled against the governor by the ruling coalition, its chairman Zdzislaw Gawlik said. The panel now wants the full lower house to vote on whether to put Glapinski on trial in the State Tribunal, a rarely used court used to determine crimes of senior officials.
The development is set to escalate tensions between the government and Glapinski, who is backed by the previous ruling nationalists. It comes at a sensitive moment for Poland as markets and credit rating companies are becoming increasingly concerned about the country’s lax fiscal policy ahead of next year’s parliamentary election.
The zloty weakened 0.2% against the euro and 0.4% to the dollar as of 4:13 p.m. in Warsaw, underperforming all EM currencies besides the Mexican peso. The development raises concerns about Poland’s institutional order and the central bank’s autonomy, even as the process to put Glapinski on trial still faces a number of hurdles.
“Bringing Glapinski before the State Tribunal would be an unprecedented event,” said Piotr Matys, a senior currency strategist at ITC Markets. “Such anxiety could be manifested by a much stronger zloty reaction to negative external factors compared with other currencies in the region.”
The probe found that Glapinski misled the Finance Ministry about the central bank’s 2023 profit, Ryszard Petru, a lawmaker and member of the committee, told reporters in parliament on Friday. The 150-page report also concluded that the central bank indirectly financed the budget deficit through bond purchases during the Covid-19 pandemic, he said.
The governor, who has repeatedly denied any wrongdoing, on Thursday dismissed the inquiry as baseless and warned it could hurt Poland’s international reputation.
Read More: Poland’s Glapinski Calls Probe Into His Conduct Baseless
Prime Minister Donald Tusk has previously pledged to remove Glapinski from office, alleging his political entanglement with the former ruling nationalists. At some point, the coalition had quietly abandoned the plan due to concerns that a legal battle could unsettle investors.
Zbigniew Konwinski, another ruling coalition lawmaker, said on Friday he expected the parliamentary majority to back the committee’s motion in a vote that is likely to happen this year.
Interestingly, the committee included the central bank’s quantitative easing process to the list of Glapinski’s potential faults, saying that the purchases of bonds took place on non-commercial terms. Such a finding may make it more difficult for the monetary authority to return to such purchases in the future, unless the legal framework changes.
Operational Continuity
The decision is bound to throw the central bank into uncharted legal territory.
A vote in favor of bringing Glapinski before the state tribunal should trigger his suspension from office. But a 2024 ruling from the country’s top court, which is dominated by judges appointed by the former ruling party and contested by the current government, said the central bank governor can’t be suspended under parliament’s current rules.
Glapinski has also been accused of allegedly intervening in the zloty without proper authorization, cutting interest rates ahead of the 2023 election despite high inflation, as well as breaching requirements to remain politically neutral. In September 2024, the central bank called the motions “defective.”
Separately, tensions have also been growing over the appointments to the central bank’s management board, threatening to disrupt day-to-day operations and its ability to respond to potential crisis.
Glapinski told reporters on Thursday that the central bank will continue to operate in a normal way and is prepared for “any circumstances.” He said he trusts that the government and the president will keep the deadlines necessary to fill the vacancy on the board on time.
“We are deeply concerned by the prospect of a failure to ensure the continuity of central bank operations,” Tadeusz Białek, head of the Polish Bank Association lobby, told PAP. “Any disruption to the functioning of the central bank and its management board would have a negative impact, not only on Poland’s image and outlook — and not merely for credit rating assessments — but also from a domestic perspective.”